First aid for county budget?

Private health care ventures may enter into partnerships with the government as a partial solution to Los Angeles County's budget crisis, county officials said last week.

County Supervisor Zev Yaroslavsky told the Business Journal his office had been contacted by several private health

"(Companies) who run clinics and some HMOs (health maintenance organizations) want to take over," said Yaroslavsky, who declined to name the firms.

Should such management transfers occur, it would dovetail with the recommendations of the county's heath care crisis task force presented to the county Board of Supervisors last week. It called for the "reversible" closures of most of the county's clinics, but spares its hospitals - which could not be reopened without tremendous difficulty - and observed that "some of the outpatient clinics slated for closure can be reopened or restructured through public/private partnerships."

The report differs substantially from Chief Administrative Officer Sally Reed's proposal to shut down a mixture of clinics and hospitals, including County-USC Medical Center.

Although the task force's plan was contingent on yet-to-be-located bridge financing and persuading the federal government to fund Medi-Cal payments for outpatient services to the tune of $300 million a year, the task force plan was widely praised by the Supervisors.

To date, there has been a wealth of evidence that the private health care community wants to engage in such partnerships:

* Jim Yoshioka, CEO of California Medical Center, owned by Burbank-based UniHealth America, continued it was investigating the possibility of running the county's H. Claude Hudson and Hubert H. Humphrey Comprehensive Health Centers, both located south of downtown.

Which costs more?

"I have a vested interest," said Yoshioka, who like many private hospital executives is concerned about having his emergency room flooded with indigent patients in the wake of county closures. "Those centers are just two or three miles away from me. Would it cost me more to see them close, or to keep them open?"

* Robert Carmen, president of White Memorial Hospital in East Los Angeles, told the task force earlier this month, "We ate in discussion with County-USC administrators regarding cooperative relationships that can be created between White Memorial, (County-USC) and the Edward R. Royball Comprehensive Health Center." The latter is a county-run clinic in East L.A.

* Good Samaritan Hospital west of downtown confirmed the facility was in talks with the county, but would not provide specific information.

"We believe there is a role for private hospitals to play, but what I think is under discussion is not so much taking over clinics, but the contracting out of specific services that the county hospitals now provide," said spokeswoman Hind Bald.

* Santa Monica-based Tenet Healthcare Corp. confirmed it had been in contact with the Board of Supervisors and is "interested in examining the possibilities of a public/private partnership," said Tenet spokeswoman Diana Takvam.

* Molina Medical Centers, operator of clinics and a health maintenance organization that treats Medi-Cal recipients, is also seeking a public/private partnership.

"This is something we would like to look at. We do delivery of outpatient care very well, and I think this is an opportunity to help out," said John Molina, Molina Medical's vice president. He added that Molina Medical sent a letter to the task force indicating its willingness to participate.

Focus on High Desert

Additionally, Supervisor Michael Antonovich is seeking a public/private partnership to restore services that could be lost at the county's High Desert Hospital in Lancaster. The task force recommended High Desert shut down its inpatient services, but continue treatments on an outpatient basis.

The task force also recommended the privatization of Rancho Los Amigos Hospital, a county rehabilitation facility based in Downey, within two years. Details have yet to be discussed.

Whether or not such partnerships could prove profitable for the private sector remains to be seen. A major concern of the private sector - indigent patients from whom they would receive no compensation - could be a deciding factor, observers said.

David Langness, vice president of communications for the Healthcare Association of Southern California, a trade group representing hospitals and health plans, noted that only 25 percent of the county's outpatient load currently qualifies for Medi-Cal reimbursement. That means the great majority of clinic patients are indigent.

"Would any of the potential (partners in) lite clinics be willing to treat 100 percent of the patients and be willing to be paid for only 25 percent of them?" Langness said. "My guess is that would be a losing proposition for anyone who did not have a large endowment."

Peter Boland, president of Boland Healthcare, a Berkeley-based consulting firm, believes the partnerships are doable - but the interests of the private parties will have to be served.

"What's going to define the nature of the partnerships are the financial arrangements. ... The private entities are not going to be doing this out of the goodness of their hearts," Boland said. "There's going to have to be some kind of deal for them to receive patient referrals from elsewhere or other new sources of business, and there's going to have to be some kind of reimbursement for the treatment that is rendered."

"I would guess the county would take all offers and assume the best," Langness said.